At war over the numbers: Alexander, Salmond in latest i-battle

Wednesday 28 May 2014

The Westminster and Holyrood governments have both tried to woo voters ahead of the independence referendum, clashing over whether Scots would be better off remaining in the UK or becoming a new state.

The Westminster and Holyrood governments have both tried to woo voters ahead of the independence referendum, clashing over whether Scots would be better off remaining in the UK or becoming a new state.

While First Minister Alex Salmond said an "independence bonus" could be worth £1,000 per person in 15 years' time, the UK Government said everybody north of the border benefits from an annual £1,400 "UK dividend".

Chief Secretary to the Treasury Danny Alexander claimed that by staying in the UK "Scotland's future will be safer, with stronger finances and a more progressive society".

He visited Edinburgh to make the case for the union as the UK Treasury published a new report assessing the fiscal position of an independent Scotland over the period from 2016 to 2035/36.

At the same time, Mr Salmond unveiled a rival publication which claimed an independent Scotland could be £5 billion a year better off in 15 years' time without having to raise taxes.

Mr Salmond said the Outlook For Scotland's Public Finances paper ''gives a very clear picture of what independence could deliver in economic terms for the people of Scotland''.

An increase of 0.3 percentage points in the long run productivity growth rate could raise an additional £2.4 billion a year in revenues by 2029/30, according to the Scottish Government report.

Meanwhile, upping the employment rate in Scotland by 3.3 percentage points - taking it to the level of the five best-performing countries in the developed world - could provide additional revenues of £1.3 billion a year, it claimed.

A rise in the population, which is less than the UK as a whole is expected to see, could net a further £1.5 billion a year by 2029/30, it argues.

The total "bonus" is worth about £1,000 for every person in Scotland, Mr Salmond said.

"We project that over a 15-year period, the tax revenue addition is £5 billion - around £1,000 a head for every man, woman and child in Scotland, or some £2,000 for each Scottish family," he said.

"We describe that as the bonus of independence - the independence bonus. Not caused by increase in taxes, but by increase in productivity, increase in the working age population and an increase in employment."

The First Minister continued: "Our campaign is being based on putting forward the potential of the Scottish economy, understanding the strengths this country has."

In contrast he claimed the anti-independence campaign is based on fear. "We don't think that scaremongering stands up to a moment's examination," Mr Salmond said.

But Mr Alexander argued leaving the UK would mean lower tax revenues north of the border and increased public spending.

He said a separate Scotland could face higher interest payments on Government debts, at the same time as it had to deal with declining oil revenues and an ageing population.

''Today we have shown that, by staying together, Scotland's future will be safer, with stronger finances and a more progressive society," he said.

''Because as a United Kingdom we can pool resources and share risks, it means a UK dividend of £1,400 a year for every man, woman and child in Scotland.

''That dividend is our share of a more prosperous future. It is the money that will pay for better public services and a fairer society.''

As the two governments published their reports they also clashed over figures which Mr Salmond claimed shows the Treasury has been ''caught red-handed trying to cook the books'' on the impact of independence.

He said: ''This leaves the Treasury claims about Scotland's finances without a shred of credibility.''

He was reacting to Treasury analysis released in advance which cited a possible £2.7 billion cost for setting up a new state, based on a £15 million estimated cost for setting up each of 180 policy departments - but Professor Patrick Dunleavy of the London School of Economics told the Financial Times the figures were "bizarrely inaccurate".

Mr Alexander insisted Prof Dunleavy's work was not part of the Treasury report, telling BBC Radio Scotland: ''£1.5 billion is the figure we use in our analysis today, but it's dwarfed by the massive deficit, the extra deficit, that an independent Scotland would have.''

Mr Salmond admitted no detailed work had been carried out by the Scottish Government on a total figure for the cost of independence.

Instead, he said any set-up cost has to take into account the £110 billion share of UK assets Scotland could be entitled to in negotiations after independence.

Mr Alexander challenged the Scottish Government to "come clean with people that there is a significant cost to setting up a new state" as he claimed what was on offer from the First Minister was a "bogus bonus".

The Treasury's £1,400 UK dividend - which effectively represents the UK Government's figure for the cost of independence - is calculated using a number of components.

The majority of the dividend comes from higher public spending in Scotland and lower onshore tax revenues at present and by 2016/17 that are not covered by higher oil revenues.

"Over the following 20 years, remaining part of the UK would insure people in Scotland against the fiscal costs of an ageing population and declining oil revenues," the analysis said.

The dividend also includes people in Scotland avoiding direct costs that would come with independence, Mr Alexander said.

He claimed: "An independent Scotland would have to spend more to deliver the same services as now. So where does that leave us? A worse starting point. The cost of setting up a new state. Unfunded policies. Declining oil revenues and an ageing population.

"All of that, easily avoided by staying within the UK, is worth £1,400 for each person in Scotland for the next 20 years. That's the UK dividend."

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